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How Libya Blew Billions and Its Best Chance at Democracy

(A previous version of this story incorrectly asserted that Goldman Sachs made a payment to Palladyne International Asset Management. A Goldman Sachs spokesman says no such payment was made, despite Palladyne's requests for one. Also corrects the 27th paragraph to say that, according to court documents, only Youssef Kabbaj courted Libyan officials with gifts and a trip to Morocco.)

Photographs by Esam Omran Al-Fetori/Reuters

In October 2011, Amr Farkash was enjoying life as an investment banker for HSBC (HSBC) in London when he heard that Muammar Qaddafi, the dictator who had subjected Libya to his bizarre and often terrifying rule for 42 years, was dead. Farkash was elated by the news. Raised in Egypt by Libyan parents, he was eager to participate in rebuilding his country, which he had never seen. “I really had no reason whatsoever to leave London and my high-status job,” he recalls recently over dinner at a restaurant in Cairo. “My life was wonderful.”

In the weeks that followed Qaddafi’s death, Farkash was seized by a vision of how rebuilding the country might also be a pathway to personal riches. The more he studied Libya, the more convinced he became that it was a gold mine—a strip of coastal desert in North Africa, next to Egypt, with a relatively well-educated population of 6 million in need of seemingly every kind of consumer product and service, for which the country would easily be able to pay by continuing to pump its usual 1.3 million to 1.5 million barrels of oil per day. The Central Bank of Libya, according to Reuters, had more than $100 billion in foreign reserves, mostly money collected from oil sales under Qaddafi. The Libyan Investment Authority (LIA), the overseas investment arm of the Qaddafi government, had about $70 billion invested with blue-chip Western companies such as Société Générale (GLE:FP) and Goldman Sachs (GS), and an additional $50 billion or more invested throughout Africa. And in Libya, every asset you could imagine was dirt-cheap. “It was a clean page,” he remembers. “You could start from scratch.”

Farkash returned to Libya that very month, along with two friends from London. Together, they started a Libyan investment bank with offices in Tripoli and Benghazi, with the aim of encouraging direct foreign investment in Libya. “You could smell that there were deals everywhere. Attractive deals,” he recalls. “Deals about to be done, and deals waiting to be done.” Land was inexpensive and increasing by the day in value, he says. You could fill your gas tank for $5.

His first inkling that something was rotten came several months after he arrived when the National Transitional Council, then Libya’s chief governing body, decided to give every family a cash payout of $2,400 from the national treasury. That implied an outlay of billions. “I thought that money would have been better spent collecting all the weapons in the country,” he says. “I thought, ‘We’re not going in the right direction.’ ”

As months passed, the system of cash giveaways by the central government became institutionalized, with payments—easily exceeding $20 billion in total—being distributed to the general populace of Libya but also additionally to anyone who claimed to have fought or been injured in the revolution. While many of the so-called revolutionaries had only a distant connection to overthrowing Qaddafi, they formed the core of the militias, which set themselves up as permanent fixtures in Libya’s cities in place of the army and the police, whose members had been sent home or jailed for collaboration with Qaddafi, regardless of whether they had actually done anything wrong.

“Anyone could stop you on the street and ask you for identification,” Farkash says. Out of fear, he usually complied. The militias began fighting each other for territory and for the cash payouts from a central state authority that was effectively held hostage as billions of dollars per month were drained from its treasury.

In June 2012, Farkash learned that people were being tortured in underground prisons in Benghazi. What made the discovery particularly upsetting was that the largest of these torture chambers was located in the 17th of February revolutionary camp, right down the street from the apartment where he was living. Farkash had always thought of the 17th of February crew as the good guys.

“I didn’t sleep that night,” he says. “The first thing that ran through my mind was, ‘If that’s happening now, what difference does it make that there was also injustice in the time of Qaddafi?’ ” The person who had told him about the torture chambers was a member of the Libyan state security apparatus, and Farkash was afraid to act. “I realized it was too dangerous to say anything,” Farkash says, still looking horrified. “This was not why I came back over. I don’t want to be part of a new nation that is being built on torture and injustice.”

Farkash left Libya two days later—then changed his mind and went back. He decided to close up shop in Benghazi, where his family is from, and join his partners in Tripoli. The capital city felt safer because of the presence of foreign embassies, which employed their own security forces. He shared an apartment with a friend who worked as a reporter for the New York Times and CNN. Night after night after work he watched footage of the street battles fought by militias who had little training in warfare, but all the equipment of a modern army. In the homes of friends and business associates, he saw heavy machine guns, grenade launchers, and shoulder-held antitank missiles. He left soon after, for good. “These are rockets used in war,” he says. “They have them stored in their houses. So if these people get pissed, what will they do with it?”

In the last few months, the Libyans have been finding out. Warring militias have destroyed large sections of Tripoli’s international airport with mortars, shoulder-launched missiles, rockets, and tanks. The fighting made the news again in July when a rocket or shell set a large oil depot on fire, sending clouds of choking black smoke over Tripoli. Shortly thereafter, 27,000 Libyans fled the fighting on foot in a single day, arriving as refugees in neighboring African countries. In just one week in July, according to a brief issued by the Soufan Group, a consultancy specializing in the Middle East, more than 60 people were killed in Benghazi, and the U.S., Britain, France, Germany, and Canada have evacuated their diplomatic personnel.

Libyan oil production has declined to about 300,000 barrels a day, and a half-dozen prominent figures on the Libyan political scene, whose names had appeared in optimistic Western newspaper articles about the brave Libyans who opposed Qaddafi and fought for a more equal and democratic future, have been murdered. Their deaths have passed without any demonstrations or other significant forms of public notice inside Libya, a measure of how irrelevant the causes for which Libyans fought three years ago have become.

Libya’s economic future, once touted as the brightest in Africa, looks equally bleak. Western news sources around the time of Qaddafi’s death reported that the dictator had stashed tens of billions of dollars away in overseas accounts that the country desperately needed to pay its bills. After the dictator was toppled, the search began for his hidden personal fortune—an El Dorado of imagined gold that was built in part on the confusion between Qaddafi’s personal assets and state-controlled assets such as the LIA. This fortune was estimated in various publications to be from $70 billion to $100 billion and quickly gave rise to a cottage industry in which fortune hunters struck deals with representatives of Libya’s National Transitional Council to locate missing assets in return for 10 percent of the take.

Not all these efforts were in vain. In London, a £10 million ($17 million) townhouse belonging to Qaddafi’s son Saadi was shown to have been purchased with diverted Libyan state funds through a company called Capitana Seas and deemed to be the property of the Libyan state. A chunk of a London real estate agency, Chesterton Humberts, was shown to have been purchased in 2011 by the family of Ali Dabaiba, a longtime member of the dictator’s inner circle. Perhaps the biggest finds were two bank accounts containing almost €100 million ($134 million) belonging to Qaddafi’s son Mutassim, who was killed during the uprising. The accounts were located in Malta, a common offshore home for hidden bank accounts and shell companies. So far the Libyan government has failed to get Malta to release the funds, and the transcripts of the trials are a hilarious primer in the art of not asking inconvenient questions when large amounts of money are wired from strange locations to accounts held by the son of a notorious dictator.

When the accounts were discovered, the person nominally in charge of Libya’s stolen asset recovery program was Abdalla Kablan, a 27-year-old mathematician whose experience in international finance was with a company called Exante. Based in Malta, it is a broker for, among other currencies, Bitcoin, the virtual currency favored by drug dealers and money launderers. Kablan also happened to be a Maltese citizen, which made him either a very clever or a highly unlikely choice to represent Libya in adversarial proceedings with that country: His appointment was apparently helped by his being the son-in-law of Libya’s current minister of foreign affairs, Mohammed Abdelaziz.

While the amounts involved in these cases are large by normal standards, they barely add up to $1 billion—pocket change for the oil-rich dictator and his petro state. “A lot of the smokescreens you are seeing are masking the biggest robbery in the history of humanity,” says Libyan-born Hafed al-Ghwell, a member of the World Bank’s Development Research Group. (Al-Ghwell adds that he doesn’t speak on behalf of the World Bank.) He is talking about the disbursal of state assets under the new country’s leadership, if it could be called that. “I can tell you financially that, in terms of foreign reserves, Libya had close to $125 billion to $130 billion until the end of last year. These numbers are verifiable.”

In addition to the country’s foreign currency reserves, the economist estimates that the LIA has from $55 billion to $60 billion in various portfolios. “They do not know what assets they have,” he says. Tens of billions of dollars, he adds, were invested in hotels, telecommunications companies, and other assets in Africa that may not be traceable. Still, a close reading of the LIA ledgers, which were leaked to a nongovernmental organization and are now available online, reveals that if tales of Qaddafi’s hidden fortune proved to be a myth, the rumors that tens of billions of dollars were looted from Libyan accounts are entirely real. And it didn’t begin with the collapse of the country.

Late one Sunday afternoon in March 2003, three officers of the Secret Intelligence Service, Britain’s foreign intelligence service (commonly known as MI6), arrived at a hotel in London’s Mayfair district for a meeting with Seif al-Islam Qaddafi, another of the dictator’s sons. Educated in the West and promoted as a moderate reformer, Seif was a familiar face in London, where he had helped broker a deal that lifted Western sanctions in exchange for Libya turning over two men suspected of facilitating the 1988 bombing of Pan Am Flight 103.

Now, on the eve of the American invasion of Iraq, Seif offered the British spies a new deal: In exchange for taking steps to further open to the West, his father would be willing to come clean about Libya’s weapons of mass destruction—which, unlike Saddam Hussein’s programs in Iraq, turned out to be far more advanced than the West imagined.

In addition to secret WMD facilities hidden in the Sahara, Qaddafi had something else of interest: billions of dollars in oil wealth that the regime was desperate to invest in banks, stocks, hedge funds, property markets, infrastructure projects, advanced fighter planes, and almost anything else that Western governments and corporations had to offer. The resulting gold rush was so wildly lucrative, and obscenely unprincipled, that it continues to reverberate at the highest levels of global finance and politics a decade later.

After British Prime Minister Tony Blair left office in 2007, he joined JPMorgan Chase’s (JPM) investment banking unit in London and became a frequent visitor to Libya. According to documents made available by the muckraking nonprofit Global Witness, Blair, accompanied by British police, would fly into Tripoli on a Bombardier Challenger 300 jet hired by the elder Qaddafi, where he’d be transported from the airport to the British Embassy and treated like a visiting head of state. He’d stay at the British ambassador’s residence and meet regularly with Seif, who oversaw the activities of the $70 billion LIA, as well as with Seif’s close friend, Mustafa Zarti, the deputy head of the LIA. While Blair has said that his trips to Tripoli didn’t involve doing deals with the LIA, the careful wording of his denials doesn’t contradict the assessment of a senior British diplomat quoted in a Sept. 17, 2011, article in the Sunday Telegraph who described Blair’s visits as devoted to lobbying for J.P. Morgan, the investment banking unit of JPMorgan Chase.

Internal e-mails from J.P. Morgan obtained by Global Witness add some texture and color to the diplomat’s assessment. One e-mail, sent on Dec. 28, 2008, from J.P. Morgan Vice Chairman Lord Renwick to Zarti, then vice chairman of the LIA, said: “On behalf of J.P. Morgan, we would like to invite you to London in the week beginning 12 January to finalise the terms of the mandate concerning Rusal before Mr. Blair’s visit to Tripoli which is scheduled to take place on around 22 January.” Rusal is an aluminum company owned by Oleg Deripaska, a Russian billionaire who was close to Blair adviser and cabinet minister Peter Mandelson; J.P. Morgan was in the running to float Rusal’s shares on the London Stock Exchange, according to the Daily Telegraph’s detailed reporting. Blair made six visits to Libya, none of which is listed on his official website, which regularly publishes the details of his foreign travels.

On April 7, 2009, Blair’s private office wrote to the British Embassy in Tripoli outlining a visit in which he hoped to meet with Qaddafi and Zarti: Rusal would eventually take its initial public offering to Hong Kong, with the LIA buying $300 million of the company shares. J.P. Morgan and the office of Tony Blair did not respond to requests for comment.

In France, a growing scandal led magistrates in April 2013 to open an investigation into the allegation that former President Nicolas Sarkozy accepted tens of millions of euros in Libyan state funds to finance his successful campaign in 2007. It became headline news on June 30, 2014, when police took Sarkozy’s lawyer into custody and held him for 48 hours. Criminal charges have thus far been filed against 10 people, including Sarkozy’s former campaign manager.

Goldman Sachs charged $350 million in fees for trades that lost the Libyans 98 percent of their $1.3 billion investment

Blair’s, Sarkozy’s, and JPMorgan Chase’s efforts to profit from association with the Qaddafis may have been unseemly, but they don’t appear to have violated U.S. law. Other financial institutions may have crossed a legal line: The LIA is suing Goldman Sachs and Société Générale in London, while the U.S. Department of Justice and the Securities and Exchange Commission are investigating several U.S. companies, including hedge fund Och-Ziff Capital Management (OZM) and the asset advisory firm Blackstone Group (BX), for violating the Foreign Corrupt Practices Act. Publicly traded Och-Ziff has warned shareholders that its future results may be affected by the Justice Department’s probe. Goldman Sachs, Och-Ziff, Société Générale, and Blackstone declined to comment.

Of the nine companies to which the LIA entrusted its $70 billion bankroll, almost all appear to have lost incredible amounts of money while charging sky-high fees. According to an audit conducted by KPMG, Société Générale managed to lose more than half of a $1.8 billion investment, while charging the Libyans tens of millions for its financial expertise. London-based investment management firm Permal Group, which received $300 million from LIA, lost 40 percent of it while earning $27 million in fees. BNP Paribas (BNP:FP) lost 23 percent: “High fees have been directly responsible for the poor results,” the auditor noted. Credit Suisse (CS) lost 29 percent of the funds that it managed. Millennium Global Investments, based in London, apparently lost all of a $100 million investment in its emerging credit fund, while a $300 million investment in Lehman Brothers vanished from the books after Lehman collapsed in 2008. Credit Suisse and Permal did not respond to a request for comment. Millennium could not be reached.

But the outstanding single offender was Goldman Sachs, which charged $350 million in fees for a series of trades that lost the Libyans 98 percent of their $1.3 billion investment. The Goldman fleece, as it might be known, was masterminded by Youssef Kabbaj, an executive in charge of North Africa, and Driss Ben-Brahim, the firm’s emerging-markets chief. Ben-Brahim, a good-humored trader educated in France, had made headlines in England in 2004 when Goldman awarded him a bonus of £30 million; in 2006, British newspapers reported he received a £50 million bonus. “We were in awe of Driss,” a former LIA executive later told the Wall Street Journal. “He was like a rock star.”

According to court documents filed by the LIA in London, Kabbaj and Ben-Brahim, who are both native Arabic speakers, courted the star-struck Libyans. Kabbaj took them on a trip to Morocco, where Ben-Brahim’s father was born, and offered them gifts such as after-shave lotions and chocolates. From January to June 2008, Goldman set up a $1.3 billion investment in options contracts on Citigroup (C), UniCredit (UCG:IM), Banco Santander (SAN), Allianz (ALV:GR), Electricité de France (EDF:FP), Eni (ENI:IM), and a basket of currencies, based on the thesis that the assets would rise in value. They went down. By February 2010, the value of the Libyan investment was $25.1 million. Kabbaj and another Goldman employee traveled to Tripoli to explain the losses to Zarti, who cursed at and physically threatened the two men. The Goldman Sachs executives were terrified enough to request the protection of bodyguards until they could flee the country.

In an apparent attempt to fix its relationship with Libya—which, after all, had proven to be supremely profitable—Goldman Sachs then offered to pay a $50 million fee to a Dutch fund called Palladyne International Asset Management, through which the LIA had already invested $300 million. Goldman could hardly have been interested in Palladyne because of the fund’s financial acumen: According to an audit conducted on behalf of the LIA, 45 percent of the funds, virtually all from Libya, invested in Palladyne were held in cash, while the rest of the investments didn’t do particularly well: “To date we have paid in excess of $18m in fees, for losing us $30 million,” an LIA investigator noted in a report. What made Palladyne notable was that it was owned by Ismael Abudher, whose father-in-law Shukri Ghanem was the longtime head of Libya’s National Oil and a trusted member of Qaddafi’s inner circle. In April 2012, shortly after Qaddafi’s death, Ghanem was found floating face-down in the Danube River in Vienna. Palladyne did not immediately respond to comment.

According to a detailed lawsuit filed in March in U.S. District Court in Connecticut by a trader named Dan Friedman, who was hired by Palladyne in 2011, the company “lacked both the management competence and the infrastructure to manage money.” Friedman, who’s suing the recruiter who hooked him up with the firm, alleges in the complaint that, “Palladyne was the asset management company equivalent of a Potemkin village, fronting for a kickback and money-laundering scheme.” The complaint offers an unusually intimate account of a corporate mirror world in which recruitment meetings, trading strategies, and the company’s vaunted “man-and-machine” trading model were used as props to disguise good, old-fashioned theft. Palladyne’s true purpose, Friedman alleges, was to serve as the investment bank version of the fake betting joint in the film The Sting, while laundering “money defalcated from Libyan government oil revenues by the family and friends of Muammar Ghaddafi” and serving as the “recipient and guardian of bribes and kickbacks from companies doing business with the Ghaddafi regime (or hoping to do business with them) or the state oil company run by Abudher’s father-in-law.” According to reports published in the financial press, the SEC is investigating whether Goldman violated the Foreign Corrupt Practices Act.

“People were making crazy amounts of money for introductions to the Libyans,” says Mohammed Rashid, an Iraqi-born Kurd based in London, who arranged the meetings between Blair and Seif. Rashid is now a financial adviser to wealthy individuals and entities from the Middle East and to Europeans and Americans who wish to do business with them. According to him and others who have direct knowledge of those transactions, paying money to fixers, matchmakers, advisers, and consultants was a common practice, and such connections were eagerly sought. One London banker says consulting fees for such transactions could range anywhere from 2 percent to 5 percent of the initial investment. None of which would have mattered as much if the performance of the investments wasn’t so dismal.

“They have no idea what they have, and what they have, they steal”

And if the West relieved Libya of a decent-size share of its national wealth in the years immediately before NATO toppled the dictator, the situation today is even worse. In April 2012, Mohsen Derregia, a research fellow at the University of Nottingham Business School, was appointed chairman and chief executive officer of the LIA following what he describes as “totally a freak accident”—an accident that left him in charge of what, at an estimated $66 billion, was still one of the most valuable investment portfolios on the planet. (That the portfolio remains somewhere near its original value is no triumph in a market that has almost tripled from its low five years ago.) Derregia’s area of academic specialization was accounting, and he knew nothing about finance. On the other hand, he was honest. He was soon forced out of the job and replaced by Ali Mohamed Salem Hibri, the deputy governor of the Central Bank of Libya, which took effective control of the LIA in April 2013.

“Libya is a monkey box,” says Rashid when asked if the Libyan government is capable of managing what remains of its wealth. “You see the chairman of the National Council or whatever it’s called appearing on television wearing slippers and holding a Kalashnikov. They have no idea what they have, and what they have, they steal.” The game of wildly overstating the personal wealth of Middle Eastern dictators, and then stealing national assets under cover of civil conflict and social chaos, Rashid suggests, is one that Western governments and financial institutions and their co-conspirators in Arab countries play hand-in-glove. “They said Hosni Mubarak and his family were worth over $20 billion,” Rashid says. “The real number turned out to be a few tens of millions. Meanwhile, when Mubarak was removed from office, the foreign currency reserves and national investments of Egypt were $54 billion. Now they are below zero. You tell me where that money went.”

In a way, it might be lucky for Libyans that 95 percent of the country’s assets in the West—including the money being managed by some of the same big-name companies who lost so much the last time around—has been frozen. Abdulmagid Breish, the latest head of the LIA, recently announced plans to hire companies to manage billions of dollars of assets, which from one perspective might help the Libyans get a handle on fees—or open up further opportunities for catastrophic losses. As for history, so many people have now left the LIA that it may be impossible for anyone to figure out what those assets were and where they went.

Sitting in a modest hotel in Qawra, a district in Tripoli favored by visitors from the Middle East, Fatima Hamroush provides a firsthand account of watching money disappear while working for Libya’s nominal government. After spending most of her adult life as a physician in Ireland, Hamroush returned to her native country after Qaddafi’s fall to become health minister. The experience appears to have done little to squelch the sparkle in her eyes or the laughter with which she punctuates her stories about the armed fighters who came to her office demanding money that was intended to heal the sick. Tales of Qaddafi’s secret fortune also make her laugh. “The man was the state,” she says in her Arabic-accented brogue. “He didn’t have to hide money from himself.” What makes her angry, she says, are the treasure hunters who sign contracts with Libyan officials to locate Qaddafi’s assets, such as the accounts in Malta. “They are a plague,” she pronounces. “I hear them on TV, in the newspaper, some are getting letters signed by government ministers, or the GNC [General National Congress, Libya’s Parliament], and it’s all illegal. It’s part of a scam.”

When asked to provide an example of how this scam works, Hamroush says Ireland has $2 billion in Libyan assets. She knows the exact sum, she says, because Irish officials made a point of telling her how much money they had and where it was located. She took the information to Mustafa Jalil, head of the National Transitional Council, at which point at least one group of asset hunters applied to receive 10 percent of the total, she says. “Somebody in the NTC is either a complete idiot or an evil genius,” she concludes. “Money is being squandered everywhere like mad.”

Giveaways to individuals and militias from Libyan state coffers during her time in office from November 2011 to August 2012 amounted to $20 billion, according to her own estimate. In addition, the government, to buy loyalty, pays 40 percent of the adult population a salary at a cost of about $6 billion a month. While that figure could have easily been covered by oil revenue during Qaddafi’s time, the country’s production is now less than a quarter of what it was. Today, the practice of loading up the budget with public salaries in order to buy public loyalty has continued—but with a difference. “Now there are two or three times as many salaries as before,” Hamroush says, and they are being paid out of the state’s foreign reserves. At the rate that they are being used, the reserves will be entirely depleted in two years.

As with the army and the police, many qualified civil servants and administrators are banned from doing their jobs because they held the posts under the Qaddafi regime, even though they aren’t accused of any crime. So they stay home and cash checks for jobs that they hold only in name. Plenty of Libyans receive checks for more than one state job. In disbanding the army and the police, the Libyan government has had to create new jobs, which are filled by militia members, many of whom had been incarcerated under Qaddafi for political offenses and also for ordinary crimes. The result, as Hamroush describes it, is a topsy-turvy world in which the state is defenseless against bands of criminals that it funds and arms. “And if you don’t follow what they say,” she adds, “they threaten you or come to kill you.”

Running a government ministry under such conditions was a challenge, Hamroush says. “I was receiving every day a huge number of people without appointments. Even if you wanted to finish your work, they would bang on the doors, screaming, shouting. It’s like that from 8 in the morning until 1 a.m.” When automatic weapons and grenade launchers failed to make enough of an impression, she adds, militias surrounded her ministry with heavy artillery and antiaircraft missiles to emphasize their demands for cash benefits, contracts, and control over government resources and funds. The leader of the men who surrounded her ministry with missiles, she says, is now head of Libya’s war wounded committee, which distributes billions of dollars to the militias. Another militant, who held four of Hamroush’s staffers hostage and forced them to sign letters related to the disposal of ministry funds, was recently appointed to a senior diplomatic post in France. “Then there was a kidnap attempt,” she sighs. She was saved by her driver, who knew the kidnapper, a petty criminal from his hometown.

It’s hard for the West to understand the full scope of the disaster that’s befallen Libya. It’s happened, in part, because no one in or outside Libya bothered to figure out what the country might really look like after the dictator was gone. “Even after Afghanistan and Iraq, no one seems to have thought seriously about what would happen afterward,” says al-Ghwell, the World Bank economist. Al-Ghwell, one of the world’s leading experts on the development of North African economies, says Libya is well along the road to becoming something new: the world’s first failed petro state. “You can imagine Somali rebels and pirates with money to burn,” he says, when asked why the collapse of Libya should bother anyone besides the Libyans.

Unlike many political leaders, Ali Zeidan, Libya’s former prime minister, is willing to discuss on the record his fear of radical Islamist cells that are often referred to by Libyans as Al Qaeda. While some of those cells do have direct links to Al Qaeda, others are linked to Ansar al-Sharia and to other salafist factions that share a willingness to die for their radical Islamist ideology. Some of these cells function as the spearhead for larger Islamist militias. “You can’t come to a compromise with them,” Zeidan says over coffee in a hotel in a small town outside Munich, where he now makes his home. “They don’t accept the civil state, the state of law, in principle. They want Islamic government. Or fanatic government.” In the vacuum left by the collapse of the state, the fanatics are extending their grip. “The problem is that there is nobody against them, no intelligence service, no army, no nothing,” he says. “So 300 fanatics can have a lot of power.”

A balding man in a cheap brown suit, Zeidan hardly looks the part of either a revolutionary leader, which some say he was, or, as others argue, a monster of corruption who fled Tripoli with bars of stolen gold, which are nowhere in evidence during our meeting. In April, Zeidan’s successor, Abdullah al-Thinni, the fourth prime minister since Qaddafi was deposed in 2011, abruptly resigned after gunmen threatened his family. In May, Ahmed Matiq was elected prime minister after another group of gunmen attacked Parliament.

When Zeidan left Libya on March 11, his plane was detained on the (then-intact) tarmac at Tripoli International Airport for more than two hours by an Islamist militia that sentenced him to death on live television for corruption and treason. He was allowed to leave only after his personal bodyguard, who had fought against Qaddafi, convinced the Islamists that seizing the prime minister at the airport would start a war.

The result is a topsy-turvy world in which the state is defenseless against criminals that it funds and arms

One thing entirely clear from the raging chaos that has engulfed Libya is that Qaddafi lives on after his death. He bequeathed to his country a fortune and a uniquely destructive sense of how the political game is played. “If you are a politician in the U.S. or Great Britain, you have to play within the rules of the game. There is a limit,” Zeidan says. “With us, there is no limit.”

When asked for an example of what he means, Zeidan shrugs. “For example, when they come and kidnap me and put five guns to my head, trying to play with me, should we pull the trigger,” he says, alluding to one incident, widely reported in the Libyan and international press, in which he was kidnapped from his bedroom at 3 a.m., “I told them, ‘It is just one moment. Life will go on.’ ”

Most threats on his life weren’t reported, he says, in part because they were a normal part of his workday. “They also put a grenade in my office,” he adds. “I told them, ‘Let us all together go to heaven.’ ” It was routine for people to enter his office armed with pistols, rifles, grenades, and even grenade launchers, he says, because the militias were much stronger and better armed than the government’s own security personnel. To say that Libya is currently governed by anyone, he says, is a joke.

What Libya needs is security, he says. Without security, Somali-style chaos, fueled by the country’s vast oil wealth, is likely to define the future. Security means boots on the ground, of course. But it wouldn’t take that many soldiers—from Muslim countries, under the auspices of the United Nations or the Arab League—to drive the militias off the streets, he argues, and make Libya secure. Western countries wouldn’t have to send troops but merely provide air support to target the bands of armed tribesmen, raiders, and salafist fanatics who regularly slip in and out of the country. Pressed to suggest foreign countries that might be willing to send troops into Libya, Zeidan can’t name a single one.

Criminalizing service to the Libyan state under Qaddafi, he says, has left the state unable to function. “If you tell all the qualified administrators to stay home and you try to manage the state without them, you are not going to succeed,” he says. While Libya’s democratic experiment might have pleased outside observers from the U.S. and France, Zeidan continues, the country’s elected Parliament was a reflection of the backward and traumatized society produced by Qaddafi. “They are just people from the market and the fields,” Zeidan says. “They don’t have any idea of what should be done for the state. And some of them are fanatics. They don’t think about country, targets, aims—everybody thinks of what he wants for himself. And some of them, when you say, ‘This is our country, our nation, our people,’ they laugh.”